QCP Highlights Signs of Capitulation in the Cryptocurrency Market, Targets Ethereum (ETH) for Potential Profits

Bitcoin (BTC) has dropped below the crucial $60,000 support level, hitting lows of $57,875. QCP, in a message on Telegram, highlighted that Bitcoin miners are showing

Major cryptocurrency trading firm QCP has highlighted key developments in the crypto market, including signs of miner capitulation and a heavy sell-off. Bitcoin’s recent dip below $59,000 has put pressure on the market, but QCP analysts believe it could also indicate an approaching market bottom.

Meanwhile, the options market shows strong interest in Ethereum (ETH) call options for September and December expiries, suggesting bullish sentiment for the second-largest cryptocurrency by market capitalization.

Here's a closer look at the market signs and how they could impact your trades.

Bitcoin Miners Showing Signs of Capitulation: QCP

Bitcoin (BTC) dropped below the crucial $60,000 support level on Wednesday, hitting lows of $57,875. This level was last seen during the crypto market crash of May 2022 when BTC fell to lows of $17,000, as highlighted by QCP in a Telegram message.

“Bitcoin miners are showing signs of capitulation. In 2022, we saw a similar hash rate drawdown when BTC fell to $17,000. Price bottoms are usually linked to miner capitulation,” the message reads.

However, despite the sell-off, the options market is telling a slightly different story. According to data from Deribit, interest is heavily skewed towards ETH call options for September and December expiries, indicating bullish sentiment for ETH.

“The options market is showing strong interest in ETH KIKOs (Knock-In, Knock-Out) to the upside,” QCP adds.

Several Potential Factors Could Push Prices Higher: QCP

In addition to the technical levels mentioned above, QCP analysts also pointed out several potential fundamental factors that could help reverse the current downtrend and push prices higher.

Both Bitcoin and Ethereum have substantial liquidation clusters on the top side, which could trigger short squeezes and push prices up.

The upcoming approval of S-1 forms for ETH could trigger a significant bounce in Ethereum prices.

Analysing Strategic Trade Ideas: QCP

Based on these observations, QCP analysts also proposed a strategic trade idea.

“Sell a 3k Put with a knock-in at 2.5k and buy a 3.6k Call with a knock-out at 5.5k, all expiring on 27 September 2024,” the QCP trade reads.

“The cost of this strategy is zero, with a maximum payout of 271.96% per annum or USD 1,900 per ETH if the spot price expires just below $5,500. But, if the spot price falls below $2,500 at expiry, investors would be required to buy ETH at $3,000.”

Crypto Liquidations Surge by 114% in 24 Hours

Data from Coinglass shows that total crypto liquidations have surged by 114% in the past 24 hours, reaching $265 million, as the global market capitalization plunged to two-month lows.

Meanwhile, crypto prices have failed to make any substantial gains during the summer, putting pressure on miners. According to CryptoQuant head of research Julio Moreno, if prices do not recover significantly during this period, we will likely see miner capitulation, as the hashprice (average miner revenue per hash) continues to make new lows following the latest halving.

“If the price doesn't go up significantly this summer, we will probably see miner capitulation. The hashprice is making new lows post halving,” Moreno said in a recent tweet.

According to CryptoQuant CEO Ki Young Ju, who goes by the pseudonym "Cap," two scenarios could play out for Bitcoin miners. They can either capitulate or wait for BTC’s price to rise above $58,000.

“Miners can either capitulate here or wait for the price to go up to $58,000. The hash rate has already dropped by 20 petahashes per second (PH/s) since May,” Cap said in a recent tweet.

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